New burrito, beverages help Dunkin' Brands edge past estimates

Nigel Travis, CEO of Duncan Brands.
Adam Jeffery | CNBC

Dunkin' Brands reported better-than-expected quarterly revenue and profit, boosted by demand for coffee-based drinks and breakfast items at its Dunkin' Donuts outlets.

The company said demand for breakfast items was led by GranDDe Burrito, which was launched as an all-day breakfast item at all Dunkin' Donuts outlets at the end of February.

Franchisees have cited the GranDDe Burrito — a $3.99 burrito with a spicy omelet — as one of the most successful promotions in Dunkin's recent history, Credit Suisse analyst Jason West wrote in a pre-earnings note.

The company also said it will offer members of its DD Perks loyalty program in the Metropolitan New York area an option to order and pay in advance through its mobile app from mid-May.

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Sales at established U.S. Dunkin' Donuts outlets, which account for three quarters of total revenue, rose 2 percent in the first quarter ended March 26. Same-store sales at U.S. Baskin-Robbins ice cream shops were up 5 percent.

Sales at U.S. stores open for at least 18 months were expected to rise 0.1 percent at Dunkin' Donuts and 2.3 percent at Baskin-Robbins, according to analysts polled by Consensus Metrix.

The company also said Paul Twohig, 62, the head of the Dunkin' Donuts U.S. and Canada business, will retire at the end of the first quarter of 2017, and that it had begun a search for his replacement.

The net income attributable to Dunkin' Brands rose to $37.2 million, or 40 cents per share, in the quarter, from $25.6 million, or 25 cents per share, a year earlier.

Excluding items, the company earned 44 cents per share, beating the average analyst estimate of 43 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 2 percent to $189.8 million, beating the average estimate of $188 million.